dividends revisited, page-17

Hi Ghalix,
Let's look at this issue of dividend rationally:-
Suppose that you own 2 mines:

One with a mine life of 10 years & one with a mine life of 20 years.

After mine life expires you are left with a hole in the ground and
secondhand machinery worth next to nothing.

In order to get your money back from the 10 year life mine you will have to get
at least 10% divvie per year and with the 20 year life mine you have to get
at least a 5% divvie per year.

Shareholders are part owners of IGR.

Therefore, it is arguable that unless IGR had an infinite mine life and that
SP perpetually increases that it will be necessary to get a dividend.

Furthermore, the shorter the mine life, the higher the divvie ought to be unless we want to sit by and watch our asset dwindle.

I know it has been the norm for miners, particularly gold miners, not to pay dividends but the GFC has utterly changed history and post GFC investors
expect some assurance that management are working for them by derisking
investment by paying dividends.

Many respected analysists predict gold settling back to much lower levels once
the GFC storm has passed by and if goldies cannot afford to pay dividends
now, then they may not be in a position to pay dividends later.

As an investor one has to seriously ask who the board and management are working for. One hopes that it is for the owners/shareholders.

Short term traders can ply their craft on opportunistic short term trades
and benefit by the volatility that non dividend paying miners offers and, in self interest, usually advocate the non payment of dividends.

Long term investors who advocate the non payment of dividends in mines with
finite life are economically shooting themselves in the foot.

Cheers
Moorookamick